Tessco Technologies (TESS) Misses Q2 EPS by 18c, Revenues Miss

Tessco Technologies (NASDAQ: TESS) reported Q2 EPS of $0.00, $0.18 worse than the analyst estimate of $0.18. Revenue for the quarter came in at $141.8 million versus the consensus estimate of $158.1 million.

Second-Quarter Highlights:

• Second-quarter revenue of $141.8 million
• 9% sequential increase in revenues

“Our second-quarter results improved sequentially over the first quarter, due to higher revenues in both our Public Carrier and Retail markets, while revenue was slightly down in our VAR and Integrator business,” said Sandip Mukerjee, President and Chief Executive Officer. “Sales improved sequentially in our Public Carrier market as we captured new wins with Tier 1 carriers and turf vendors.

“However, on a year-over-year basis, our Public Carrier business is down slightly as we continue to see some project delays, although to a lesser extent than in the first quarter,” Mukerjee continued. “We believe revenues in this market will improve as the year progresses. More significantly, our VAR and Integrator revenues are down 6% compared to a year ago. We are taking steps to improve performance in this market in the short-term. Finally, on a year-over-year basis, our Retail market continues to be challenging as we have previously disclosed.

“After 70 days at the helm of the Company, I am optimistic about Tessco’s opportunities going forward,” said Mukerjee. “We have strong relationships with our customer and supplier partners, we are increasingly utilizing our own innovation to help support our customers and solve their business challenges, and we have a talented and dedicated team.

“It is clear that we have work to do to accelerate our earnings growth. While I have only been here a short time, we have already begun to make important changes in our structure, designed to improve order processing, supply chain management and inventory optimization. We also have implemented a stronger discipline around building and managing our sales pipeline and driving customer intimacy. We are making important technology and process investments to enhance our competitive advantage and drive profitable growth. I have also undertaken a strategic study of the business to be completed by the end of our fiscal year, with the goal of ensuring that all of the Company’s assets and resources are being best utilized to enhance long-term shareholder value,” concluded Mukerjee.

Business Outlook

In light of second quarter results and the difficulty in forecasting results for the fourth quarter, which is historically Tessco’s most difficult quarter to forecast, the Company now rescinds all previously given financial guidance. Accordingly, the Company no longer expects aggregate year-over-year revenue and earnings growth for the final nine months of the Company’s fiscal year, as outlined in last quarter’s Business Outlook. The Company does, however, expect positive earnings in the third quarter.

The Company’s expectations published in this press release reflect only the Company’s current best estimate and the Company assumes no obligation to update the information contained in this press release, including the Business Outlook, at any time.

For earnings history and earnings-related data on Tessco Technologies (TESS) click here.

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